On 14 February the EU Council agreed the text of the proposed Directive to postpone the deadline for the transposition into Member States of Directive 2016/97 on insurance distribution (IDD) to 1 July 2018 and the application date of new rules to 1 October 2018.

Therefore, it is now very likely that the Italian Government will have time to finalize the transposition process of the draft Legislative Decree for the implementation of the IDD in Italy until 1 of July.

New conduct rules for the distribution of insurance financial products

On 16 February CONSOB published the outcome of the consultation and the Resolution No. 20307/2018 ("New Consob Regulation on Intermediaries") setting out – among others - the secondary level measures for the transposition in Italy of Directive 2014/65/EU ("MiFID II").

The New Consob Regulation on Intermediaries will significantly affect life insurance companies and intermediaries that manufacture and distribute insurance financial products to Italian customers.

Indeed, the new regulation amends the previous set of rules of conduct for Italian and EU banks, investment firms and financial intermediaries when distributing or providing advice on insurance financial products (i.e. index and unit linked policies and capitalization products) as well as to insurance companies when distributing their insurance financial products directly to their clients.

In line with the primary legislation that implemented Mifid II in Italy (Italian Consolidated Financial Act) Consob extends to the distribution of insurance financial products the new requirements set out by the directive concerning, among others, the following:

information duties vis-à-vis clients;

written agreements;

general principles on the management of clients' instructions;

suitability and appropriateness evaluation of the product to be distributed to clients' needs;

cross selling of insurance financial products with other financial instruments and investment services;

terms and conditions for the admissibility of inducements;

professional expertise requirements of the staff that will be in direct contact with the clients when provides advisory services;

internal procedures, compliance, management of complaints, conflict of interest rules (including rules on inducements to be paid to employees of the relevant intermediary) and

door-to-door selling.

Moreover, the new rules regarding the "product governance" for manufactures and distributors would also apply to insurance companies and financial intermediaries before the marketing of a new insurance financial product and in case of significant amendments to the same.

Perhaps the main issue for the insurance market in the next few months is to understand how most of the above new rules will be coordinated with the Italian implementing provisions of the IDD regarding the distribution of the insurance based investment products (category that also include insurance financial products).

In this regard, we note that the Italian law of delegation to transpose the IDD provided that Consob rules in relation to inducements (as well as the related sanctions) were to be extended to the distribution of insurance-based investment products identified by the IDD. Now Consob clarified that whenever stricter rules are set out by Mifid II and national implementing regulations compared to IDD (e.g. rules on inducements), the former would prevail.

Click here to download the new CONSOB Regulation on Intermediaries and the outcome of the consultation and here to read the newsflash of our financial services team on the same.

On 15 February IVASS published the outcome of the consultation and the Resolution No. 68/2018 amending Regulation No. 38/2011 on the establishment and administration of separately managed accounts of undertakings that pursue life assurance under Article 191 of the Italian Insurance Code and other regulations indirectly impacted by the proposed amendments (Regulation No. 14/2008 on the merger between segregated funds and Regulation No. 22/2008 on insurance undertaking financial accounts).

The new rules are aimed at introducing changes for the calculation of the average rate of financial return of the segregated funds in order to grant an equal participation of the insured to the financial performance of separately managed accounts.